true WELLth Podcast: Bryce Skaff Episode Transcript

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Stan Hall:

The true WELLth podcast is made possible by Brighton Jones. Brighton Jones is the financial well-being firm that helps you align your wealth, your passions, and your purpose. Learn more about how you can live a richer life at brightonjones.com.

Bryce Skaff:

Yeah, plenty of evidence to suggest that we can trace illness, disease back to stress, somehow. So as we said before, there are these four stressors, health, family, workplace, and money. What’s really interesting about all of those is that they’re undivorcable from one another. They don’t exist in silos. They exist together. The question is, how closely are they tied? Can we help manage health and wellbeing, simply by managing our finances better? And the answer seems to be yes. And let’s tug on that string just a little bit. If we can figure out how to more productively manage our finances, have more realistic expectations, be clear, or more confident, more knowledgeable about our financial experience, we’re less likely to be stressed when these externalities enter our lives. If we’re less likely to be stressed when markets are volatile, or returns are negative, or there’s an unexpected expense, or something happens, we’re less likely to let that interrupt our family responsibilities. We’re less likely to let that interrupt our workplace productivity and obligations and in doing so, we’re less likely to be stressed. When we’re less likely to be stressed, it’s a higher likelihood that we’re going to have a productive health experience.

Stan Hall:

Hello, and welcome to the true WELLth podcast. This week, we are going to dial into the intersection of financial wellbeing and emotional wellbeing, specifically, as you heard in our intro, stress and its effects on our lives. Here to help us break down these two complex topics, is Bryce Skaff. Bryce is the co-head of the Global Client Group for Dimensional Fund Advisors. He oversees Dimensional’s work with financial advisors and professionals across the board, disseminating how Dimensional views markets and what they believe to be a healthy portfolio construction. Now, this is not meant to be an esoteric conversation on what stocks are hot right now, or what a proper allocation is. Far from it. Our conversation instead, follows the path of how financial knowledge impacts stress and how unmitigated stress can proliferate throughout the rest of your life. Let’s dive in.

Bryce Skaff:

Well, thankfully when I was in college, I had the opportunity to have lots of different experiences in the field of finance. When you say you’re in finance, it’s like, there’s so many different fields inside finance. And I know that the people that aren’t in the, quote, “industry”… Oftentimes, I say I’m in finance or I’m in investments and they say, “Oh, you’re a stock broker. What do you like?” Well, I learned very early on what I liked and what I didn’t like in the general finance industry and it guided me on a path to where I am. What do I mean by that? Well, when I was in college, my first job was actually for… Well, I was a research assistant, which I really enjoyed doing research for the finance faculty, but I also worked at a stock brokerage firm. And what I learned was that there is a part of the financial industry, they call financial advice, but really is sales. And I did not enjoy that.

Bryce Skaff:

It was all about selling, selling, selling. There wasn’t a lot of interest in what was right for the client. It was really about a product sale, but it was good. It was a good experience. It’s a lot of cold calling, but I learned that’s not what I wanted to do. Then I ended up working for an RIA firm and that was much more about the client experience. It was much more about discovery and making a financial plan, making investment recommendations that suited the client. I also worked for a large investment company, a mutual fund complex. And from there, I learned how the packaging, how the engineering and packaging works a financial product, that financial advisors might use. So it maybe was no surprise, as I look back, that where I am now at Dimensional Fund Advisors, it is very well, right at the intersection between engineering, strategies and solutions that work for investors, and working with financial advisors who know those investors best.

Speaker 3:

Bryce, thinking about those investors and the end users of a financial advising, it’s a common trope that we fear what we don’t understand. Would it be unfair to apply that axiom to our own financial lives?

Bryce Skaff:

Sure. To the extent that knowledge helps manage uncertainty, then yes, for sure. It’s one of the things that we often talk with financial advisors that work with our organization is the importance of imparting knowledge on investors. I think it’s unfair to develop a financial plan and invest people’s capital and not have a conversation with them about why, and about how markets work, about what to expect from markets. If you give them that, they are much more likely to be confident and feel empowered and understand markets are here for their favor. Many people who don’t get education from great financial advisors, they feel like markets are a gambling casino with the odds stacked out of their favor, when the reality is, markets are built for their favor as investors, if you can harness them properly, but it takes knowledge and communication to make sure investors actually get that story.

Bryce Skaff:

If they get that story, and the internalize it, they’re much more likely to stay with the program and have a productive, longterm financial experience. What I find myself talking about a lot, not just with advisors, but investors, is this idea that people view investing almost as a destination. I give an advisor some money, or I invest the money today, I need it in 20 years. As long as they have enough money in 20 years, then it was a success. I think that’s only part of the story. Investing is an experience. It’s not just about having enough money. It’s about what that experience of investing does in your life, along the way, the journey itself. So it’s part destination, it’s part journey. If I invest for an expense, a consumption expense, maybe a vacation home, or education for family, or healthcare for my parents in 20 years, and I’ve got enough money in 20 years, but I was stressed and anxious every single day and I felt ill-prepared and uncertain.

Bryce Skaff:

And I felt like I was on the wrong end of the odds. That’s not a great journey, not a great experience because as we’ve already talked about, money stress is going to find its way into other areas of our life. So what we want to do, is provide knowledge, provide education, provide confidence and empowerments that people can live a successful life along the way, knowing they’ve done everything they can to increase the probabilities of a positive destination. We can never say for sure that when we invest someone’s money, they’re going to have X in 20 years. Life doesn’t work that way. Markets don’t work that way. If markets were utterly predictable, there would be no returns because there would be no risk. So we have to understand that all we’re trying to do when managing someone’s financial affairs, is increase the probability of more successful outcomes as best we can.

Bryce Skaff:

So it’s very similar to how I think about health. So when we think about wealth, it’s what are the things we can do with someone’s financial wealth to increase the odds, increase the probability of a successful outcome? Same thing with health. What can we do to increase the odds of having a successful health experience? We can sleep, we can have a good diet, we can work out, and move, and be fit, we can have good personal relationships. All of those are related to a good health experience, but just because we do those, doesn’t entitle us to a life that is free from health worries. It just increases the probabilities that we won’t have disease, illness. Or if it does come into our lives, it increases the probability that we will get through it more productively.

Stan Hall:

Bryce, you mentioned the idea of money stress. Now, how is that different? Or maybe, perhaps it’s a kin to other categories of stress that we may feel in our lives.

Bryce Skaff:

Stress affects our lives in myriad ways. Some obvious, some less obvious. Some conscious, some subconscious. I think all of us know intuitively that it’s damaging. It’s just tough to know how it’s damaging. What we do know from scientific evidence is that stress can be traced back to, either as a direct cause or an aggravator, of lots of illness, disease, and poor conditions. Coronary issues, respiratory, hypertension, insomnia, mental and emotional issues, unhealthy habits, like over or under eating, not spending time on fitness, not moving, being sedentary, all of those are associated with stress in our lives. It’s challenging when we don’t really understand where stress comes from or how it shows up in our lives. The only way that we can hope to manage it is by digging a little bit deeper and trying to understand how it shows up for us, how we respond to it.

Bryce Skaff:

And when we think about different types of stressors, it’s tempting to blame the external world as the cause of stress, but what’s really interesting, when you start unpacking this stuff, is we have ourselves to blame a little bit, or maybe a lot bit, for stress because stress is simply a response to what shows up in our lives. The act itself, the occurrence itself, is not stress. Stress is an experience that we, as individuals, as human beings, put forth. So when you look at a lot of the studies and you just think about your own life, whenever I ask people, “Hey, let’s talk about, how does stress show up in your lives?” And almost always, it’s nailed four different types. Health, and wellbeing, physical wellbeing, family responsibilities, workplace obligations, and then money, finances. That’s really it. That captures it. When we think about our own lives, when we feel stressed, almost always, we can put it into one of those buckets.

Stan Hall:

That’s a really unique way to think about stress, as that we are also culpable in its manifestation.

Bryce Skaff:

Yeah, indeed. When we think about stress, it’s important to understand, as I said before, that an action or an experience outside of yourself is not stress. How it gets processed is what causes stress. And so when an externality comes into our life, whether it’s volatile markets, or negative returns, or something that happened in your life, or something with your kids, that act itself, that experience, isn’t the stress. It’s when it attaches to something inside ourselves when stress occurs. So in other words, it’s activating something. It’s switching something on inside of us that causes stress. When I think about the types of stress or switches that we’re holding, they’re just waiting to get activated. What are those switches? I think about it in three groupings. One is fear and uncertainty. If we’re constantly fearful and uncertain about the world in general, or about something in particular.

Bryce Skaff:

For example, if we are fearful that financial markets are a destructive mechanism in our lives, the moment volatility shows up, you’ve switched on stress because it reinforces what you already held dear in your heart, so fear and uncertainty. The second one is unproductive attitudes and perceptions. The third one is unrealistic expectations. So here’s an example of this one. If I view the equity market as a get rich quick scheme, in other words, I have to put a down payment on a house in a month, two months from now, and I need to double my money in order to make that down payment. Let me just invest in some stocks and I’ll surely have the amount of money I need in a month or two. That is an unrealistic expectation. People often confuse possibility with probability. In other words, it’s possible you can double your money in a couple months. It is highly improbable. So if your expectation is you’re going to do that, and that doesn’t work out, which is the likely outcome, you’re [depressed 00:11:42] because you’ve placed an important need and layered it on top of an unrealistic expectation.

Bryce Skaff:

So all of these are the activations inside of us, fear and uncertainty, unproductive attitudes and perceptions, unrealistic expectations. When something enters into our life, if they’re attaching on to any one of those things, it’s highly likely to have a stress outcome, a high level of anxiety. To paint the picture a little bit clearer about these stressors switches, I’ll often ask the question, when stress flares up in your life, where will stress find you living? Let’s say that you and I went out to a dry brush field somewhere, very brittle, very dry, very arid, hasn’t seen rain in years, and we light a match, and we simply just throw it on the ground. What’s going to happen? It’s going to light, it’s going to take hold quickly, and it’s going to spread quickly. It’s a scorched earth before we know it. Now let’s take the very same experience and simply put it in a different environment.

Bryce Skaff:

You and I are now standing in a verdant lush environment, maybe a rainforest somewhere, maybe a green field somewhere, there’s water around, we light that same match and we throw it on the ground. What’s going to happen? Nothing. It will be absorbed and extinguished, not spreading swiftly and scorched earth. Very different outcomes from the very same action. So what we want to do is figure out how to create in ourselves, this resilient verdant environment, so that no matter what’s happening in our lives, we are prepared to respond productively to it. And again, I keep going back to this notion of as an investor or someone participating in a financial plan or doing budgeting. If we’re better prepared, if we have more productive, perceptions, more productive attitudes, if we feel empowered and confident and knowledgeable about our experience, we are better prepared to withstand and make decisions and react to whatever life throws at us, whether it’s volatile markets or an unexpected expense that comes your way.

Stan Hall:

Bryce, I would assume then, that you try to employ this line of thinking in your own day to day. Do you find yourself able to live a calmer or happier existence because of it?

Bryce Skaff:

I think stress and happiness are related fields of study. And when you look at the science of happiness, it’s pretty well documented that there is a stasis, there’s an encoded amount of happiness that we’re born with. And that’s maybe good, maybe bad for people to hear, but the good news that I hear is that there’s a healthy amount that is within our control, that we can opt into, that we can choose. So I spend a lot of time thinking about, how do I choose to be happy? How do I choose to experience a life that is less stressful? And one of the ways is to first get really clear on passion and purpose. What’s really important to us in our lives? How do we want to live?

Bryce Skaff:

How do we understand the trade-offs in our lives, so that we are choosing things that reinforce and support the ways that we want to live our lives, or the ways that we want to pursue purpose, if you will? So if we can first, be more self-reflective, understand ways in which we might get stressed ahead of time. The key to this is being proactive. When we’re caught on our heels, that’s the time when stress shows up. I’ll give you another example. You might remember, mid-January, 2018, there was a big scare in the state of Hawaii, when we got false alarm on our phones, and I happened to be in Hawaii when this happened, the false alarm basically said, “Take cover. There’s a nuclear strike coming your way. This is not a test.”

Speaker 3:

The U.S. Pacific command has detected a missile threat to Hawaii. A missile may impact on land or sea within minutes. This is not a drill. If you are indoors, stay indoors. If you are outdoors, seek immediate shelter in a building.

Bryce Skaff:

And I remember that experience, I was thinking, “Holy cow. Nobody prepared me for how to react to that.” So my wife and I were scrambling, trying to figure out how to stay alive. What are our best odds? What can we do to stay alive when this thing hits maybe 12, 15 minutes from now? And it was, I’d say, an incredibly disruptive experience because we were not prepared. I had no idea what to do. Nobody coached us. Nobody talked to us. Nobody even told us this was within the realm of possibility. And so when I think about other areas of stress in our lives, a lot of it comes down to not being prepared, not actually understanding the range of possibilities that might show up in your life, and how you might react to it ahead of time. It was actually a really interesting study in human behavior because when it happened, you saw everybody looked at their phone because it buzzed everybody’s phone.

Bryce Skaff:

And some people were simply paralyzed because what you do in a situation, [inaudible 00:16:10] you look to other people for guidance. I don’t know what to do. Maybe somebody else knows what to do. And that’s natural. We always do that as human beings. Let me look to someone else who maybe has some insight, some information I don’t have because I know nothing about how to react right now. And we did, we picked up our heads, we looked around and some people huddled down the beach and they simply were paralyzed. It was almost like they had cement blocks on their feet, just looking at their phones, no expression, paralyzed. Other people, you could see, looked at their phone and they just started running. I don’t know where they were going, but they were running somewhere. So it was really a volatile experience and definitely one, I actually think quite a bit about these days.

Bryce Skaff:

It serves to reinforce the role of a financial advisor. I actually talk about this experience quite a bit in the conferences we do with advisors. I’m a huge advocate of the work advisors do because I think, at its core, the financial advisor prepares a client or an investor to stick with a program and respond productively, no matter what’s thrown at them, whether it be a market-driven experience that’s thrown at them, or whether it be something totally unexpected. It could be a personal situation arises, an unexpected healthcare expense arises, college tuition is higher than they thought it would be, that they’re going to be okay. An advisor is there to condition and educate and give confidence that they’re going to be okay and they can stick with the program.

Stan Hall:

Productive negative thought is not a habit most of us possess. Considering the negative outcomes of the future can not only be overwhelming and anxiety inducing, but also downright depressing. However, though difficult, if negative is harnessed correctly, it can provide some benefits. Going back all the way to the Stoics, they evangelized this concept of premeditation of evils, basically, mindfully considering all the probable bad outcomes and tempering expectations accordingly. For example, Seneca was known before taking a trip to write down all the negative events that could befall him. His ship could sink, he could become ill away from civilization, he could be robbed.

Stan Hall:

Now, whether or not any of these predicaments occurred, didn’t really matter. What was important is he managed his expectations because one universal truth is an unexpected pleasant surprise is always welcomed, whereas an unexpected misfortune is exponentially worse. Said differently, a stranger buying your coffee makes your day, but when a different stranger bumps into you and spills said coffee on your shirt before a job interview, well, that can cause for panic. And so armed with the possibilities in your mind, you need not fret or prepare for that possible free latte in your future, but keeping a tide pen can save you from future stress. The hardest part of this of course, is applying this in matters of higher magnitude than say, a stained shirt.

Bryce Skaff:

Yeah. Well, I’m a big believer in coaches, in general. I think that there’s… We can’t expect to be experts in myriad different parts of life. Generally speaking, we become experts in, if we’re lucky, a couple, three things. Most of us, we spend our lives doing one thing and we’re an expert in that body of work. So when I find someone who’s better than I, who’s more studied than I, who’s more experienced, more skilled, I’m always interested in learning from those people. And when I think about surfing, it’s maybe the thing I enjoy most. And so as I started getting a little bit older, clearly you lose a little bit of strength and I started getting more stressed as I was surfing bigger and bigger waves. I start getting more stressed about getting pulled under, getting held under what’s called a multiple wave hold down. If you fall on a wave and there’s another wave behind it, and another way behind that, how long can you hold your breath?

Bryce Skaff:

And the fear, for whatever reason, the fear mechanism started kicking in. And probably started kicking in… I actually had a really bad spill. I was in the North Shore of Kauai, probably surfing on some waves that are bigger than was well advised for me, but I didn’t get held under for a very long time. Very, very scary experience. And that triggered more fear in my mind, going back to this idea of fear and uncertainty or unproductive attitudes. Every time I’d go out and the waves were a little bigger than comfortable for me, the fear kicked in. So I met this gal, and I learned she was a former world champion free diver, a Russian lady. I thought, “My God, how often is it that you meet a world champion of anything?” And I asked her whether or not she would help coach me.

Bryce Skaff:

I don’t want to be a world champion free diver, but if somebody can help me manage the cause of my stress, which is fear and uncertainty and unproductive attitudes, when I get held under, I’ll be able to find much more fulfillment in one of the things I love most. So can she coach me to manage things, either physiologically manage things to hold my breath longer, or mentally and emotionally manage myself, so that I’m exerting less effort when I’m getting held under? So she did some private lessons for both my wife and I actually, and what we learned was just fantastic. We learned what was actually going on in the body. When it felt like we were running out of oxygen, just the knowledge that I actually wasn’t running out of oxygen. I had plenty left, it was just nitrogen levels rising in my body.

Bryce Skaff:

The physiological knowledge about what was going on in my body allowed me to relax a little bit more and allowed me to hold my breath a little bit longer and manage myself. She had taught us exercises, things to do to prepare for the experience itself, and she taught us how to react when things are unexpected underwater. So all of that together, again, I keep going back to this analogy about coaches and when things show up in your life, it’s instinctual. You know how to react without consciously going through the machinations of trade-offs, real time. And so that was just incredibly helpful. And I use that all the time, now. I use the [inaudible 00:21:49] before I go surfing. I do lung exercises. I try to remind myself about what’s happening in my body.

Bryce Skaff:

I do breath hold exercises before I go out, just to, again, get familiar with the feeling of feeling like you’re running out of breath and managing that a little bit, so that when it happens, when I’m out there, it’s not quite as scary. So the question for me, not just in that part of my life, but other areas of my life is, can I learn things? Can I condition myself? Can we condition ourselves to have less fear, to have more productive attitudes about those things that we’re trying to do, where we find fulfillment and enjoyment? Can we have more realistic expectations about what we’re likely to confront in our lives? And if we can do those things, if we’re more knowledgeable, if we’re more confident, if we have empowerment and discipline and more informed expectations, we’re more likely, back to that example of the stressor switches, we’re more likely to let those external stressors be absorbed and extinguished, so we can go about the life of being fulfilled.

Speaker 3:

Bryce, before we go, obviously you have spent hours upon hours thinking about stress, fear, and expectations. I’m curious about you, though. How do you manage the day-to-day ebb and flow of stress?

Bryce Skaff:

Yeah. When stress shows up in my life, it’s almost subconscious. The reaction is almost subconscious now. And my wife and I were actually talking about this last night. I told her I was having a conversation with you today and what the topic was, and she asked me the same question, actually, at dinner last night. How do you manage it so well? And my response was, “It’s a habit now. It’s practice.” I think I learned very early on, the idea of trade-offs, and perspective, and the range of outcomes, and understand that if I make a choice and I understand, not the full range, you can never understand the full range of outcomes that can happen, but a trade-off. If I choose this, here’s the other side of that. That if the other side shows up and it’s not great for my life, but it shows up, at least I was aware that it was a possibility. Again, really, stress is driven by these when things are uncertain, unclear, we’re surprised, we don’t know what to do, we’re not prepared.

Bryce Skaff:

That’s when it really takes hold. So as long as I’ve already recognized what a possible outcome might be, I learn to accept it and move on much quicker than trying to process it real time. So stress isn’t about ignoring what happens in your life. That’s life, we can’t ignore what happens in our life. It’s just, the question is, how do you quickly move on from it, in the way that serves your purpose, in the way that reinforces the way you want to live your life? We can all find perfectly good reasons to wallow in sadness and despair every single day. There’s ample reasons. Look, today, the world is giving you plenty of reinforcement, if that’s the way you want to live your life. But if you don’t want to live your life that way, and you want to live with confidence and feel empowered, then the question is, how can I make a habit of that?

Bryce Skaff:

In other words, when things show up in my life, can I recognize them, be conscious of them every time they show up and say, “Okay, I recognize you. Does this serve me, yes or no? What’s the range of outcomes if I do recognize this and want to wallow in it? What’s the trade off there? Or if I want to recognize it, learn from it and move on, what’s the other side of it?” And again, I keep going back to using financial markets and financial advice as a… It is the perfect experimental environment for stress and response to stressors, or switches in ourselves because as I said, money stress, in plenty of studies, is the number one stressor. A lot of people think it’s my family or it’s living in poor health. Money stress seems to be the number one stressor in a lot of people’s lives. So I keep coming back to finances as an example because if we can figure out a way to create a habit of recognizing what’s happening with our financial plan.

Bryce Skaff:

Maybe our plan got derailed a little bit, maybe markets aren’t doing what we thought they would do this year, if we can recognize that I can’t control what has already happened. What I can control is whether or not I can be introspective. Did I make a decision before this happened that ignored this as a possibility? Did I make a decision that accounted for this as a possibility? And given what’s happened, would I make a different decision now? In other words, markets were volatile this year. We know it’s a very uncertain environment with COVID. Knowing that’s already happened, I can’t change the past, would I make a different decision today? Or should I be sticking with my program today, that I’ve worked on? But the instinctual reaction is what we’re going for, it’s that I don’t have to think about it too hard in the future, that when something shows up, I’m already very well-practiced, deliberate practice at recognizing events, processing them, and moving along.

Stan Hall:

My takeaways for this episode are one, stress can be a choice. Stress can feel like this amalgam of an enemy, but if we can take a moment and categorize it, we can boil it down into four things, really. Health and wellbeing, family responsibilities, workplace obligations, and money stress. They aren’t divorceable from each other either. Doing work on your financial life and arming yourself with knowledge of what your financial plan is doing for you, will improve the way stress manifests itself in your home life. Two, a little knowledge goes a long way. Understanding what is happening when fear strikes, can determine your reaction, whether it’s nitrogen rising in your body while holding your breath, or riding out a volatile bear market. You don’t have to be a doctor or an economist to have a firm working grasp of what is causing your fear, and ultimately, put yourself more at ease.

Stan Hall:

Three, finding a coach is imperative. Coaches provide knowledge that helps us understand what is causing stress and fear. Coaches not only teach us what we need to know, but then they draft a plan and perhaps, most importantly, make sure we stay the course. Undertaking your finances or health by yourself, risks way more stress than it is worth. To learn more, check out our show notes page at truewellthpodcast.com. There, we will have Bryce’s bio and links to previous episodes. If you liked today’s show, we would be eternally grateful if you left us a review on iTunes, or if you just personally recommend us to someone in your network. Every little bit helps get the word out. We love to hear from listeners, so to get in touch with the team, you can find our contact at truewellthpodcast.com. And remember it that’s WELLth, W-E-L-L-T-H, .com. Until next time.

Stan Hall:

The true WELLth podcast, made possible by Brighton Jones. Whether you want to save for the future, or celebrate today, give back to the community, or explore the globe. Brighton Jones believes your values are every bit as unique as your fingerprints. Brighton Jones aligns your time and resources to those values, so you can go after the things that you truly care about. Explore your richer life at brightonjones.com. Today’s episode was edited and produced by Stan Hall, alongside the rest of our true WELLth team, Michael Stubel, Marc Asmus, Lindsey Hurt, Tara McElroy and John Dougherty. To get in touch with the team, visit truewellthpodcast.com.